Appraised value puts buyer and seller at odds

Saturday

Jun 29, 2013 at 12:01 AMJun 30, 2013 at 9:21 AM

Q: I am purchasing a home listed for $180,000. We signed a contract to buy the home for $178,000 with the seller paying $2,000 in closing costs.

Q: I am purchasing a home listed for $180,000. We signed a contract to buy the home for $178,000 with the seller paying $2,000 in closing costs. The appraisal came in at $170,000 so I then offered the seller $170,000. The seller initially refused to budge from the contract price but lowered the price to $174,000 and included some furniture and other items. The seller also wants my real-estate agent to reduce her commission by 1 percentage point.

Why would I pay more than the appraised value? I want this house but am set to walk away. Trying to reduce my agentís commission is ridiculous; that should be up to the agent.

Am I being realistic?

A: The appraiser looked at the home and judged its value at $170,000. Appraising is an art, not a science ó and therein lies the problem.

If the appraiser is right, the question for you is what rights you have under the contract to get out of the deal if the home doesnít appraise at the agreed price. If you can cancel the deal, you can walk away without a financial penalty.

The seller canít be forced to agree to come down to the appraised value. The seller can wait and get another buyer or can meet your demand. Given the impasse, the seller has suggested having your real-estate agent cut his commission.

Youíre right. Whether your agent decides to take a cut is up to your agent.

In some situations, a buyerís real-estate agent will reduce his or her commission only if the sellerís agent takes an equal hit.

You should have a conversation with your real-estate agent about the property and anything the agent knows that might affect your decision, as well as whether the agent is willing to reduce the commission.

Consider your lender. If the appraiser says the property is worth only $170,000, the lender will lend you money based only on that amount. Do you have the cash to make up the difference?